Curbing Government Contractor Abuse

Huge no-bid contracts given out by the Federal Emergency Management Agency after Hurricane Katrina guarantee that many of the same companies looting taxpayers in Iraq will clean up from the Gulf Coast disaster too.

Huge no-bid debris-removal and reconstruction contracts given out by the Federal Emergency Management Agency after Hurricane Katrina guarantee that many of the same companies looting taxpayers in Iraq will clean up from the Gulf Coast disaster too.

People whose jobs and homes were washed away are finding it difficult to get in on the action. First, President Bush signed a waiver of the prevailing wage requirements that normally apply to federal contractors. The administration also junked affirmative action requirements for contractors. Minority contractors complain they are being shut out, like many Iraqi-owned firms excluded from working their own country’s reconstruction.

FEMA has made the contracting process even more opaque by outsourcing procurement and contracting processes to companies like Acquisition Solutions and Ashbritt.

Ashbritt’s ties to Mississippi Gov. Haley Barbour may be one reason the firm received a $500 million contract. Barbour knows how the game works. He helped Ashbritt get similar work in Florida last year, and he consulted for companies bidding on contracts in Iraq, along with former FEMA head Joseph Allbaugh. Allbaugh, whose Baton Rouge offices are in the eye of the current contracting windfall, is reportedly consulting for Halliburton and Shaw, another no-bid FEMA contractor.

Back in Washington, Sen. Mel Martinez, R-Florida, hosted a “Katrina

Reconstruction Summit” for contractors. The Sept. 26 meeting was co-sponsored by Halliburton.

The administration should have learned from the botched reconstruction of Iraq that real success requires the involvement of those with the most at stake in planning decisions. But the administration apparently can’t figure out why, when it’s got so many friends working as lobbyists and contractors, it should bother talking to anyone else.

Of course the Gulf Coast is not the Persian Gulf. And a modest effort is afoot to prevent the kind of contracting abuses witnessed in Iraq. House and Senate appropriations committees have sent dozens of inspectors to monitor the Katrina contractors, and a bipartisan group of senators led by Susan Collins, R-Maine, and Joseph Lieberman, D-Conn., wants to let the inspector general whose office uncovered the fraud and waste in Iraq oversee the Katrina contracts. Sen. John Cornyn, R-Texas, has introduced a bill that would establish stiff criminal penalties for misuse of relief and reconstruction funds.

These are good ideas, but if Congress really wants to prevent the waste, fraud and other abuses seen in Iraq, it needs to exclude companies with a track record of contracting abuses from participating in any contracts.

On the same day that Martinez was helping Halliburton, 19 members of the Congressional Progressive Caucus called on the president to suspend Halliburton from any new federal contracts based on its history of fraud, bribery and abuses in Iraq and elsewhere. The caucus’ proposal likely will be dismissed as partisan sniping. But it makes sense: the federal government suspended Enron from any new federal contracts when its crimes were revealed (even before any of its executives was indicted or convicted). We ought to protect taxpayers by applying the same exclusion sanction to Halliburton.

Federal acquisition regulations require the use of “responsible contractors.” Surely there are few companies with Halliburton’s astonishing track record of bribery, fraud and other abuses. Recall the truckloads of overpriced gas imported from Kuwait to Iraq, the $100 laundry bags, $45 cases of soda, the deliberate torching of $85,000 trucks in need of repair, multiple cases of bribery in Iraq and Nigeria, the use of a Cayman Islands subsidiary to do business in Iran (in violation of U.S. policy), and so forth. Numerous investigations into Halliburton’s contracting practices and abuses are still under way at the Department of Justice, the Securities and Exchange Commission and Treasury Department.

The Army Corps of Engineers cannot be trusted to enforce the responsible contractor standard. It recently demoted Bunnatine Greenhouse, the high-ranking whistle-blower who told Congress that contracts awarded to Halliburton represent “the most blatant and improper contract abuse I have witnessed during the course of my professional career.” Greenhouse says she was “removed because I steadfastly resisted and attempted to alter what can be described as casual and clubby contracting practices.”

Another federal government office responsible for enforcing responsible contracting standards has been undermined by Bush’s penchant for placing political cronies with questionable competence in high-level bureaucratic positions. David Safavian, whose Office of Procurement Policy at the General Services Administration oversees an estimated $300 billion worth of annual government contracts, was recently arrested for lying to investigators and obstructing an investigation into Republican lobbyist Jack Abramoff.

With incompetent or corrupt cronies in charge of enforcing responsible contracting rules, it’s not surprising that Halliburton got a $16 million contract after Katrina. But if Congress is serious about preventing the same flood of fraud, waste and other abuses that we witnessed in Iraq from being repeated, it must exclude corporate recidivists like Halliburton from any future contracts.

Cray is a contributor to Foreign Policy In Focus, director of the Center for Corporate Policy and co-director of HalliburtonWatch.org.